FINRA Investor Survey Reveals Support for Regulatory Protections

The Financial Industry Regulatory Authority (FINRA) recently released a survey of U.S. investors designed to measure perceptions of fairness and to gauge demand for additional regulatory protections. FINRA’s Investor Survey was conducted October 7 through October 9, 2014 and October 27 through October 29, 2014. Respondents were recruited from a nationally distributed online panel and included U.S. adults ages 21 or older, having primary or shared responsibility in their household for investment decisions.

Although the cut-off for inclusion was at least $10,000 in securities investments, not exclusively in tax-deferred retirement accounts, more than 70 percent had investments over $100,000.

FINRA’s survey of 1,000 adults revealed that 92 percent of investors agreed (62 percent strongly agreed and 30 percent somewhat agreed) that it is important to have a regulatory “cop on the beat” to protect investors and police the securities markets. In addition, 70 percent of investors surveyed strongly agreed and 24 percent of investors somewhat agreed that it is important that regulators use the latest tools and technology to protect investors.

Highlights of FINRA’s survey include:

88 percent of investors believe it’s moderately or very important for regulators to detect when unsuitable securities are being sold to investors.

90 percent believe it’s moderately or very important for regulators to detect when brokers are making trades that benefit themselves and not the investor.

89 percent believe it’s moderately or very important for regulators to detect when firms are taking risks that potentially harm their investors and the financial system.

Nearly three quarters of investors surveyed (74 percent) would support additional regulatory protections to safeguard them from misconduct by brokers or brokerage firms. According to FINRA, only one in five were opposed to additional protections if it meant a minimal increase in the costs that brokerage firms passed on to them. By comparison, 56 percent of those surveyed expressed support for additional protections even if it meant a minimal increase in their costs.